New Jersey's inheritance tax depends on who receives the property, not on how large the estate is. Spouses, civil union and domestic partners, children, stepchildren, grandchildren, parents, and grandparents pay nothing. Siblings and sons- and daughters-in-law pay 11% to 16% after a $25,000 exemption, and nieces, nephews, friends, and most others pay 15% to 16%.
Does New Jersey still have an estate tax?
No. New Jersey's estate tax was repealed for deaths on or after January 1, 2018. The inheritance tax was not repealed and remains in effect. The federal estate tax is separate and applies only to very large estates, above an exemption amount that federal law sets and adjusts over time.
Who pays New Jersey inheritance tax?
The tax depends on the beneficiary's relationship to the person who died:
- Class A: exempt. Spouse, civil union partner, or domestic partner; children, including adopted children and stepchildren; grandchildren and other lineal descendants; parents; and grandparents. A stepchild is Class A, but a stepchild's children are not.
- Class C: first $25,000 exempt, then 11% to 16%. Brothers and sisters, including half-siblings, and sons- and daughters-in-law.
- Class D: 15% to 16%. Everyone else, including nieces, nephews, cousins, aunts, uncles, unmarried partners who are not registered domestic partners, and friends.
- Class E: exempt. Qualifying charities, educational and religious institutions, and certain government entities.
The rates are graduated, so higher amounts are taxed at higher rates. As simple illustrations, a sibling who inherits $100,000 generally pays 11% on the $75,000 above the exemption, or $8,250, and a niece who inherits $50,000 generally pays 15%, or $7,500. The calculation for larger amounts, or for an estate with many beneficiaries, should be done carefully.
Who actually bears the tax depends largely on the will. Many wills include a tax clause that says whether tax comes out of each beneficiary's share or out of the estate as a whole. Either way, the executor is responsible for making sure it is reported and paid. If the person who died lived outside New Jersey, the tax can still reach New Jersey real estate and certain tangible property located here.
What is exempt from New Jersey inheritance tax?
- Everything passing to Class A and Class E beneficiaries
- Life insurance paid to a named beneficiary, regardless of class
- The first $25,000 passing to each Class C beneficiary
What is not exempt can surprise people. Property passing through a revocable living trust, payable-on-death accounts, and jointly held property can all be taxable when the recipient is in Class C or D. Gifts made within three years before death can also be presumed to have been made in contemplation of death and taxed as if they passed at death, unless that presumption is overcome.
When is the return due, and what are tax waivers?
Where a return is required, it is generally due within eight months of the date of death, and interest generally accrues on late payment. The executor files with the New Jersey Division of Taxation.
Tax waivers matter even when no tax is owed. A bank or brokerage may hold back part of a New Jersey account until a waiver is issued, and title companies generally require a waiver before real estate can be sold or transferred out of the decedent's name. When everything passes to Class A beneficiaries, simplified affidavit forms are often available in place of a full return. Our page on how probate works in New Jersey explains where this fits in the overall timeline.
Can you plan to reduce New Jersey inheritance tax?
Often, yes, if you are leaving property to Class C or D beneficiaries. Common approaches include:
- Using life insurance with named beneficiaries to provide for nieces, nephews, or friends
- Making lifetime gifts well before death, keeping in mind the three-year rule and any Medicaid planning concerns
- Leaving charitable gifts to Class E organizations
- Writing a clear tax clause so the burden falls where you intend
- Coordinating beneficiary designations and joint accounts with the will, so a large asset does not land on a taxable beneficiary by accident
These choices are part of a broader estate plan, and they should be weighed against your goals, not made for tax reasons alone. Your will is usually where the tax clause lives.
Talking to a lawyer about your situation
If you are an executor facing an inheritance tax return, or you are planning to leave property to a sibling, niece, nephew, partner, or friend, it is worth getting the numbers right before deadlines pass. A lawyer can review who is in which class, which assets are exempt, and what filings the estate needs.
Gray Law Group is in Jefferson and works with executors and families throughout Morris, Sussex, Warren and Passaic counties and northern New Jersey. We would be glad to talk through your situation.
This website is for informational purposes only and does not constitute legal advice. Prior results do not guarantee a similar outcome.